Picture this: a buyer falls in love with your home, only to learn that the sunroom or finished basement wasn’t officially approved. That revelation instantly changes the tone of negotiations. When it comes to selling a house with unpermitted work, your choice is simple: either fix the issue by getting retroactive permits or disclose everything and sell the property ‘as-is.’
The first path can lead to a smoother sale at a higher price, while the second often means lower offers and roadblocks from lenders. It’s a critical decision with major financial implications that every seller in this position must face.
What Happens if You Sell a House ‘As-Is’?
Selling a property as is with unpermitted construction means you are offering the home in its current condition without making repairs or securing retroactive permits. While this option often appeals to sellers who want to save time or avoid costly renovations, it comes with trade-offs that impact both pricing and the pool of potential buyers.
Investors, house flippers, and cash buyers are typically more willing to accept unpermitted additions, especially if they see value in renovating or repurposing the property. This allows homeowners to bypass lengthy permitting processes and reduce upfront expenses.
However, the trade-off is likely to be a reduction in the final sale price.
Appraisers may not include unpermitted spaces in the valuation, which lowers the property’s official worth. Buyers also anticipate extra costs to bring the work up to code and will often negotiate aggressively as a result.
Another consideration is financing. Mortgage lenders are cautious about unpermitted work, and in some cases, they refuse to approve loans for properties with unresolved issues.
This caution stems from the bank’s need to protect its investment. Unpermitted structures may not be safe, could be subject to municipal fines, or might even be legally required to be torn down. These risks create a major liability and threaten the home’s value as collateral, making it an unacceptable gamble for most traditional mortgage providers.
That narrows your buyer pool primarily to those with cash or alternative financing strategies. Insurance can be another hurdle, since companies may exclude coverage for damages linked to unpermitted areas of the home.
Real estate disclosure is the most important step when selling as is. Sellers are legally required in most states to inform buyers about known unpermitted work.
Failing to do so opens the door to lawsuits even after the sale has closed. Being upfront in your listing and disclosure forms helps protect you legally and gives buyers a clearer picture of what they are purchasing.
We recommend looking into options to help you sell your house for cash to get started.
Should You Get Permits Before Selling?
For homeowners with unpermitted work, one option is to secure retroactive permits and bring the property into compliance before listing it for sale. While this path often requires more time and money, it can eliminate major obstacles during the selling process.
Local building departments typically allow property owners to apply for permits after the fact, provided the work meets current codes. That can mean inspections, corrections, or, in some cases, partial demolition if the original work was not up to standard.
Choosing to obtain permits offers several advantages. Buyers tend to place greater trust in a home that has been cleared by city inspectors, and lenders are more likely to approve mortgages without hesitation.
Appraisers may also include previously unpermitted additions when calculating the home’s value once they are legally recognized. This can raise the final sale price and attract a wider pool of buyers who prefer a move-in-ready property.
However, the process comes with challenges. Fees for permits vary by city and project size. Additional expenses may arise if contractors need to redo electrical or structural work.
The timeline is another factor to consider. Depending on the jurisdiction and the extent of the renovation, resolving permits can take weeks or even months. Sellers working under tight deadlines may find this option challenging to manage.
Despite the costs, investing in permits can provide peace of mind for both sellers and buyers. It demonstrates that the property complies with local safety standards, reduces liability, and minimizes the chance of disputes after closing.
Frequently Asked Questions
What happens if I don’t disclose unpermitted work?
Failing to disclose known unpermitted work can lead to serious legal trouble. A buyer could sue you for fraud or misrepresentation even after the sale is complete. This could result in you being forced to pay for the cost of permits, repairs to bring the work up to code, or, in some cases, even a full reversal of the sale. Full disclosure is your best legal protection.
Can I get a permit for work done by a previous owner?
Yes, in most cases. As the current homeowner, you are responsible for the property’s legal standing. You can typically apply for a retroactive permit from your local building department. However, you will be responsible for proving the work meets current building codes, which may require inspections and potentially costly corrections.
How much does a retroactive permit cost?
The cost varies dramatically depending on your location, the scope of the project, and the condition of the work. You can expect to pay for the permit application fee itself, which can be several hundred dollars. If the work doesn’t meet current codes, you’ll also have to pay contractors to make the necessary repairs, which could range from minor adjustments to significant structural changes.Although you’ll have to pay for a retroactive permit, most home improvement projects come with a return on investment that could end up making the decision profitable for you.
Selling a House With Unpermitted Work: Now You Know
There’s a lot to consider when it comes to selling a house with unpermitted work. However, you should now have enough information to make an informed and confident decision!
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